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We have a team that specialises in buy to let mortgages and getting you the best rates out there – they know all about the current regulations and how each lender ‘stress tests’ your portfolio.

What can I borrow?

Lenders link this to the rental income of the property and depends on the type of property, your tax rate and the buy to let mortgage product.

Which buy to let mortgage is right for me?

This will depend on whether you’re buying for long-term capital growth or to maximize your income. Our experts will show you.

How can we help?

Our buy to let mortgage brokers have years of industry knowledge and this experience is invaluable to help maintain and grow your portfolio. We also have access to exclusive mortgage rates from lenders that only deal with brokers like us.

Important information

Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.

A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances. A typical fee is £495.

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.

So, how does it all work?

Fancy life as a landlord, or have a property you don’t want to sell yet and need to rent out? Then you will need a Buy to Let Mortgage. This is a special type of mortgage that allows a current or prospective landlord to buy a property with the intention of letting out that property to tenants. It’s a great way to get some extra income and expand your property portfolio. But things aren’t as simple as they were a few years ago and you need to know about all the recent buy to let mortgage changes (don’t worry, we are fully up to date and will guide you through them).

Whether this is to grow a portfolio, to obtain short-term capital growth or long-term income supplement, it is important to weigh up all the options with an experienced, professional broker. Low interest rates may seem attractive, but a plethora of fees and reversion rates can come back to bite.

Unlike looking for a property to live in, you need to remove emotion and consider the investment potential of the property. Below are some key considerations you should think about:-

  1. Rental Income – most lenders require the rent to exceed the monthly mortgage payments, on an interest-only basis, by 145% per month at an assumed rate of around 5.5%, though this does depend on your personal tax rate, the type of property and whether you are buying in a personal name or through a limited company. For example, this can be as low as 125% at the pay rate on a 5-year fixed product.
  2. Objectives – is the property to bolster your income, or for longer-term growth, or both? There will be tax aspects you need to consider so please make sure you get independent tax advice from a specialist. Getting rental income may be a nice bonus, but it could push up your total income tax rate and mean you are no longer eligible for certain benefits.
  3. Talk to your Estate Agents for advice on property type and location.
  4. Talk to a professional broker about your options. Trust us on this, even if it’s not us (which would be upsetting) make sure you do not attempt to do this alone. We will help guide you through the myriad of regulations and criteria to make sure you get the right buy to let mortgage for you.

 

First Time Landlord Mortgage Requirements

So you’ve decided that becoming a landlord is right up your street, but what are the requirements for lenders to give you a buy to let mortgage?

As with a residential mortgage, there are the usual criteria you need to meet to be eligible for a mortgage, but as a landlord there are some extra considerations:

  • Your deposit – this will usually be higher than a regular residential mortgage. Be prepared for a 15-25% deposit on the property.
  • Age – the minimum age is 18 however some lenders will refuse borrowers under 21 or 25. On the other end of the scale, some lenders won’t lend to people aged 75 or over. Your Coreco advisor will find the right lender for you.
  • Property use – lenders will prefer someone who is planning to offer single assured short-term tenancies. HMOs and holiday/short term lets may require a more specialist lender which your Coreco advisor can help with.
  • Income and affordability criteria – As a landlord, you will need to show lenders that your rental income from your property will cover the mortgage payments by 125-145%.
  • Along with the above requirements, you’ll also need to get your paperwork ready for your mortgage application.

Your Coreco advisor will let you know exactly what your chosen lender requires but generally you’ll need:

  • Latest bank statements
  • Proof of ID
  • Proof of income eg payslips or SA302s
  • Any outstanding debts
  • While not necessary, if you can show that you have experience as a landlord this can help applications.

 

Extra Costs To Consider

While lenders will make sure you can afford to pay back your mortgage each month, there are also other costs to consider as a landlord. It’s well worth doing some further research into these costs as these can vary on the house you’re letting out and the area it’s in. We’ve put together some of the more forgotten costs of being a landlord below:

  • Energy Performance Certificate – An EPC shows tenants how energy efficient the property is. While this is generally a small cost it is something that will need to be completed before any viewings are taken making it an upfront investment in the property.
  • Electrical Safety Inspection Report – Since July 2020 landlords are obligated to get an electrical safety report to make sure that all national standards for electrical safety are met. This must be renewed every 5 years.
  • Gas Safety Certificate – A gas safety check is another legal requirement and must be completed annually. This involves a gas safe registered engineer checking all gas appliances and fittings.
  • Smoke/Carbon Monoxide Alarms – All landlords are required to fit smoke and carbon monoxide alarms. Luckily this is a sensible and inexpensive requirement!
  • Letting agent fees – If you decide that you want to use a letting agent it’s well worth researching the costs involved, especially if your investment property isn’t local to you. Depending on the level of management you require this can quickly become one of your larger costs.
  • Landlord License – Certain boroughs require landlords to register and obtain a landlord license before you can let out your property. This requirement and cost varies per borough.
  • Landlord insurance – Much like normal building insurance you will need to make sure you have an appropriate level of cover. At a minimum, you’ll need building insurance to get your mortgage but landlord insurance can also cover emergency call outs as well as legal expenses.
  • Maintenance, Repairs & Redecorating – The biggest and least predictable costs are any maintenance and repair jobs.

These are just a few of the hidden and unexpected costs of being a landlord but we’d recommend doing further research into the costs once you have an idea of which property you want to invest in.

For experienced landlords, or for those with a large property portfolio, actively managing your portfolio to ensure you have the right mortgage rate on each property or can gear up and release equity for future purchases is of vital importance when looking to grow.

We have years of experience helping landlords do just that, in fact, we have a special team of buy-to-let advisors. It may be possible to agree on a credit line or facility for you to buy additional properties quickly and cheaply, making the most of rental and capital growth opportunities.

For professional landlords, the Prudential Regulation Authority, (PRA) have been explicit in the fact that they feel buy to let mortgage lenders should be underwriting portfolio landlords, defined as anyone with 4 or more mortgaged properties, in a very different way to those with just a couple of properties.

Professional landlords applying for a buy to let mortgage will now need to provide more information which can include the following:

  1. Details of personal or alternative sources of income and associated Tax Returns, including evidence that the appropriate tax is paid on the rental income
  2. Detailed Portfolio summary to include more than the standard Property Value, Rent Received, Mortgage Amount and property address provided previously. It should also include columns on costs associated with the property, for example, service charges, ground rent, lettings agent’s costs, insurances etc. In some instances, this portfolio will be stress tested to check the rent covers the mortgage payments.
  3. Asset/Liability Statement
  4. Cash Flow Projection
  5. Business Plan and commentary

Our experts at Coreco know which buy to let lenders require what and can help ease the burden to direct you to the most appropriate lender.

Limited Company Borrowing.

Given the recent tax changes many of our landlords now want to borrow in a Limited Company rather than personal names. We strongly recommend, in fact we insist, that our clients obtain independent tax advice to ensure they are borrowing in a manner that is right for them.

If a Limited Company is the preferred route, then no worries. Our experts know exactly which lenders can help and offer you the very best interest rates to fit your circumstances.

Residential Development and Commercial Finance

For landlords with portfolios of a certain size, the line often blurs between residential investment and commercial financing, whether it is developing a site, converting a property into flats, or even building from scratch. Getting the right finance and advice in this area of the market is just as critical and can often mean the difference between turning a healthy profit or not. Our team at Coreco Commercial have years of experience in property development finance and buy to let portfolio mortgages.

Section 24, dubbed “the biggest threat landlords have ever faced”, ushered in a new era of tax changes phased in from 6th April 2017, which will come to a head in 2020. This potentially pushes landlords into a higher tax bracket, paying more tax and potentially losing access to certain benefits.
In summary, this package included the following:

  •  Landlords of furnished lets could claim a wear and tear allowance of 10% of their rental income. With effect from April 2016 this relief was restricted to expenditure actually incurred.
  • Mortgage interest costs could be deducted against rental profits which effectively gives the landlord tax relief at their highest marginal rate of tax. From April 2017, this relief was reduced over 4 years to the basic rate of income tax (which is currently 20%).
  • From April 2016 Stamp Duty increased by 3% for landlords (and second home buyers)
  • Mortgage lenders have had to adapt their rental coverage stress tests and deal with Portfolio landlords, (defined by the Prudential Rental Authority as those with 4 or more mortgaged properties), in a very different way. They have to stress test their whole portfolio, see a business plan, cash flow statement and, most importantly, see that tax is being paid correctly.
    As a result, many landlords looking at buying new properties are more inclined to purchase these in Limited Company names now rather than personal names and it is imperative that anyone looking at an investment property gets independent tax advice before they do anything.
  • From April 1st, 2018, it is now against the law in England and Wales for landlords to grant a new tenancy to either new or existing tenants if their property doesn’t have an Energy Performance Certificate rating of ‘E’ or above.
  • Even this is not the end; new Government rules will mean that many Buy to Let Investors will now have to become licenced HMO landlords.

Previously, a licence was only required for properties with three or more storeys that are occupied by five (or more) people from at least two households. Now this has been extended to all properties that are occupied by five or more people from two or more households – regardless of the size of the property.

However, even with all of this, professional landlords are sensing an opportunity and if you structure and gear your portfolio correctly with the right tax advice, savvy landlords can still do good business.

It is more important than ever to look for a buy to let broker who understands the current market and the numerous foibles of each individual lender. Luckily for you, we do! Managing a portfolio is a serious blend of science and art these days, but for those with the patience and an expert like us alongside them, landlords can still look forward to a rosy future.

There are a wide range of options out there for buy to let mortgages as well as the types of properties and how you plan to rent them out.

  • The most common type of buy to let mortgage is someone with a single property who rents single assured short-term tenancies. These types of buy to let mortgages are generally straightforward.
  • Portfolio buy to let mortgages are for those that have 4 or more rental properties. These are similar to the standard buy to let mortgage above and are designed to keep things simple for those with multiple properties. You can learn more about portfolio buy to let mortgages from the team at Coreco Commercial.
  • Limited company buy to let mortgages are similar to the standard buy to let options however rather than personally borrowing the money, it’s done through a limited company as this can reduce your tax liability. It’s best to speak to a tax advisor to make sure this is the best option for you before committing.
  • Houses in multiple occupation (HMO) are houses where people have their own rooms but share common facilities such as a kitchen and bathrooms. These can generate greater rental income but they can also be more complicated to manage. For more information take a look at our HMO mortgages.
  • Holiday lets can be more complicated than traditional rental properties due to the short term stays and the irregular income generated from these properties. However, at Coreco we work with a range of specialists holiday letting mortgage providers.

Latest buy to let mortgage offers

We know you’re curious so we’ve picked out some of today’s best mortgage rates to give you an idea which lenders and interest rates could be available to you.

    Latest mortgage best buys

    Based on a property value of £300,000 with a mortgage of £180,000.

  • Initial rate

    Overall cost for
    comparison

  • 1.95%
    then 6.44%
    (variable)
    5.7%
    APRC
  • 2.39%
    then 5.24%
    (variable)
    4.8%
    APRC
  • 2.4%
    then 4.99%
    (variable)
    4.5%
    APRC


  • Narrow down the right mortgage for me

Buy to let guides

Keep up to speed with the latest buy to let changes with our jargon-busting mortgage guides.


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Simone Ferraro

"Fantastic job and quick mortgage We had the pleasure of working with Ash, who was extremely..."

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Simone Ferraro
Fantastic job and quick mortgage
We had the pleasure of working with Ash, who was extremely professional and, at the same time, very friendly. He guided us through the process of getting a mortgage, explained all the potential issues we may encounter, and eventually got us a mortgage in less than a week. Cracking job, couldn't have asked for better and will definitely return when it's time to remortgage!

Tim

"Big thanks to Amy and Anh Big thanks to Amy and Anh for looking after us..."

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Tim
Big thanks to Amy and Anh
Big thanks to Amy and Anh for looking after us from choosing the best mortgage to offer to completion. We have always had 5 star service from Anh and now from Amy who was equally outstanding in anticipating and meeting our needs through a very lengthy process.

Luisa

"Sarah Aitken arranged both my original mortgage and my remortgage. I was worried the first time..."

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Luisa
Sarah Aitken arranged both my original mortgage and my remortgage. I was worried the first time round as I had heard from various people how stressful the process could be, and as I was looking to buy an ex-local authority property I had already been turned away by a couple of big lenders. In the end however, obtaining a mortgage was the easiest part of buying a flat. All thanks to Sarah and her two equally helpful colleagues, Abbey and Olivia. When my remortgage came up, Sarah got in touch a few months before to check in with me and see what my plans were. When it was time, Sarah again took care of everything and all I had to do was send in my docs. So, so grateful that something that can be incredible stressful ended up being such a breeze for me! Would absolutely recommend using Coreco, and Sarah in particular.

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